Income Tax Appellate Tribunal - Ahmedabad
Kishorbhai B.Satasiya, Ahmedabad vs Assessee on 14 August, 2015
ITA No.1442/Ahd/2012 Assessment Year: 2008-09 Page 1 of 10 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD "B" BENCH, AHMEDABAD [Coram: Pramod Kumar AM and Kul Bharat JM] ITA No.1442/Ahd/2012 Assessment Year: 2008-09 Kishorbhai B. Satasiya, ............................Appellant B/59, Matrushakti Society, India Colony Road, Bapunagar, Ahmedabad.
[PAN: AZXPS 2245 R] Vs. Income Tax Officer, ........................Respondent Ward 11(3), Ahmedabad.
Appearances by:
S.V. Agarwal, for the appellant D.V. Singh, for the respondent Date of concluding the hearing : August 11 th, 2015 Date of pronouncing the order : August 14 th, 2015 O R D E R Per Pramod Kumar AM:
By way of this appeal, the assessee appellant has challenged correctness of learned CIT(A)'s order dated 23rd April 2012, in the matter of assessment under section 143(3) of the Income Tax Act, 1961 ('the Act' hereinafter), on the following effective grounds:-
"The order of learned Commissioner of Income-tax (Appeals) - XVI [CIT(A)] is bad in law as well on facts on the following grounds ;ITA No.1442/Ahd/2012
Assessment Year: 2008-09 Page 2 of 10 (1) The learned CIT(A) has erred in confirming the disallowance made by A.O. of Rs.9,14,150/- as unexplained investment being cash deposited in saving bank account with Ahmedabad Mercantile Co-op Bank Limited, Bapunagar branch, Ahmedabad, in as much as,
(i) The A.O. has not decided the case on merits and facts of the case.
(ii) The AO has not examined the party i.e. father of assessee Shri Balubhai Shambhubhai Satsiya, who has opened the saving bank account and who deposited the cash in said account.
The said account is owned by him.
(iii) The A.O. has not considered agricultural income of Shri Balubhai Shambhubhai Satasiya, who deposited cash in saving account and A.O. has not given any finding on this claim of the assessee.
(2) The learned CITA has erred in rejecting the additional evidences stating that same cannot be admitted though additional evidences were admitted and remand report was called for."
2. Briefly stated, the relevant material facts are like this. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that as per AIR information available with him the assessee has deposited Rs.11,29,250/- in his saving bank account with the Ahmedabad Mercantile Co-operative Bank Limited, Bapunagar Branch, Ahmedabad, but the said account was not reflected in the balance sheet of the assessee. On these facts, the Assessing Officer inferred that the deposit made by the assessee were out of his undisclosed sources and required the assessee to show cause as to why this amount not be added as his undisclosed income. The explanation furnished by the assessee, as evident from the following observations in the Assessment Order, was partly accepted and partly brushed aside :-
"In this regard, vide the submission filed by the assessee dated 13-12- 2010, it was submitted by the assessee that the said Bank A/c. in the name of the assessee, was operated by his father in the name of the assessee and cash deposited in the bank account as per above was from his agriculture ITA No.1442/Ahd/2012 Assessment Year: 2008-09 Page 3 of 10 income for the year under consideration as well as savings of the earlier year. His father Shri Blubhai Shmbhubhai Satasiya was having agriculture land round 13 vighas at village Govindpur, Ta. Dhari, Saurashtra. As the assessee was staying in the city, due to his business, thinking the future of the assessee as a guardian and well-wisher of the family of the assessee, he wanted to invest some money in Shares and Securities for the family of the assessee. However, being an agriculturist and not a businessman, he was not having PAN No. which was necessary for the opening of Bank A/c. as well as opening of Demat Account for share transactions. Under the circumstances, PAN No. of the assessee was used by his father to open the Bank A/c as well as the Demat Account and the said Bank A/c as well a the Demat A/c was operated by his father only and the entire transactions including the sum deposited in the Bank Account as well as the share transactions entered through the Bank A/c. as well as the Demat A/c. were entered by his father only and not he but his father was accountable and responsible for the same.
It was further stated by the assessee that sum of Rs.1,72,100/- has been redeposited in the Bank Account from the withdrawal made on earlier date as well as a sum of Rs.48,000/- has been deposited from the withdrawal made from the proprietary concern of the assessee M/s Kunj Textiles. The claim of the assessee to the extent of R.2,20,100/- (1,72,100 + 48,000) s per the above, is hereby accepted as the assessee has adduced supporting documentary evidences in this regard, however, the explanation submitted by the assessee as per the above, for the rest of the amount deposited of Rs.9,14,150/- cannot be accepted as the assessee has failed to explain the source of the same with cogent evidences/supporting documentary evidences. Under the circumstances, it is apparent that the source of the sum deposited in the above bank account was not accounted for in due course and it was not reflected in the regular books of accounts of the assessee.
Under the circumstance, the sum deposited as per the above, in the above mentioned bank account, to the extent of Rs.9,14,150/- is hereby considered as unexplained investment made during the year under consideration which was not accounted for in his regular books of accounts and an addition of Rs.9,14,150/- is hereby made on this score considering the same as his concealed income from the undisclosed sources for the year under consideration and the same is added to the total income of the assessee."
3. Aggrieved by the stand so taken by the Assessing Officer, assessee carried the matter in appeal before the ld. CIT(A). The assessee also sought permission to produce ITA No.1442/Ahd/2012 Assessment Year: 2008-09 Page 4 of 10 additional evidence in support of the factual contentions embedded in his explanation, which was noted and brushed aside, but all in vain. Relying upon Hon'ble Punjab & Haryana High Court's judgement in the case of Rajat Bansal vs. CIT [(2011) 200 taxmann.com 72 (P&H)], he declined to admit the additional evidences. On merits, learned CIT(A) rejected the explanation of the assessee as an afterthought and as self contradictory partly the source of funds was explained by the assessee out of his own drawings. The assessee is aggrieved and is in appeal before us.
4. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.
5. A plain reading of the Assessment Order shows that the Assessing Officer has simply noted the explanation of the assessee and brushed it aside. The Assessing Officer did not even go through the motions of examining the explanation on merits. Such an approach of the Assessing Officer cannot stand any judicial scrutiny. It is only elementary that the Assessing Officer is under a legal obligation to examine the explanations of the assessee on merits and by way of a speaking order. The reason of his rejecting an explanation must be stated clearly. No such exercise has been carried out in this case. In case the Assessing Officer was of the view that the factual elements embedded in the explanation need to be supported by evidences and corroborative material, he had to put the assessee on notice in this respect. As for the CIT(A)'s stand that it was not a fit case for admission of additional evidence, in support of assessee's explanation, we are unable to see any legally sustainable merits in this approach either. ITA No.1442/Ahd/2012
Assessment Year: 2008-09 Page 5 of 10 It was a case in which assessee's claim remained unsubstantiated and the assessee was offering evidence to substantiate the same. While on this aspect of the matter, it is useful to take note of the following observations by a co-ordinate bench of this Tribunal, in the case of ITO vs. Bajoria Foundation [(2001) 254 ITR (AT) 65 (cal)], wherein, following Hon'ble Bombay High Court's judgement in the case of Prabhavati S. Shah vs. CIT [(1998) 231 ITR 1 (Bom)], the co-ordinate bench had observed as follows :-
"In this regard, we may however refer to observations of Shri G. Krishnamurty, the then Hon'ble President and while articulating views on behalf of Jaipur Bench of this Tribunal in the case of Electra (Jaipur) (P) Ltd. vs. IAC (1988) 26 ITD 236 (Del), which are reproduced below :
"After going through the evidence placed before us, considering the facts of this and going through the orders of the authorities below, we are of the view that the assessee should not be disqualified from producing this evidence merely on the ground that the evidence was not placed before authorities below. The sole purpose of judiciary as of the Revenue is to get at the truth. If the truth is that payment of commission was genuine and was dictated by the business needs, such a payment should not be disallowed merely on the ground that assessee was unable to lead proper evidence or on the ground that evidence lead was of such a nature as to create a very high degree of suspicion. There should be no objection to consider any evidence produced, to test its authenticity and relevance and then act on it. If the evidence is genuine, reliable, proves assessee's case, then assessee should not be denied the opportunity. But on the other hand, if the evidence led turns out to be spurious, fabricated or of irrelevant nature, such consequences, as provided under the law, will ensure. It is, therefore, incorrect to shut out the assessee in the process of administration of justice from leading evidence to prove its case. The earlier inability to lead the evidence should not be held against the assessee unless it is known to the Court or suggested to the Court or there was evidence to the suspect that evidence was fabricated. There is no such suggestion in this case. We are therefore, of the opinion that request of the learned counsel is reasonable and request made by the Department for the refusal of its admission is not proper......"
5. We also find that Hon'ble Orissa High Court in the case of B.L. Chowdhury vs. CIT (1976) 105 ITR 371 (Ori) have observed that by the virtue of s. 250 wide provision has been made conferring jurisdiction on the first appellate authority to make such inquiry as he deem fit and that CIT(A) does not exceed his jurisdiction if he asks or allows the appellant to file additional evidence in the matter he thinks fit. Hon'ble Bombay High Court, in the case ITA No.1442/Ahd/2012 Assessment Year: 2008-09 Page 6 of 10 of Smt. Prabhavati S. Shah vs. CIT (1998) 148 CTR (Bom) 192 : (1998) 231 ITR 1 (Bom), have observed that r. 46A does fetter the right of the assessee to produce evidence but it does not restrain CIT(A)'s powers under s. 250(4) or 250(5) of the IT Act and that this rule appears to ensure that evidence is primarily led before the AO. In view of this judgment of the Hon'ble Bombay High Court, if prima facie an information is necessary to examine the claim of the assessee, the CIT(A) should consider the necessary evidence in exercise of his powers under sub-ss. (4) and (5) of s. 250. It is trite that Rules have to be framed within the scope of main, provision and that a rule, which travels beyond or is inconsistent with or is repugnant to the provisions in the statute will be ultra vires and void. Rule 46A was introduced w.e.f. 1st April, 1973 and as a result of insertion of s. 295(2)(mm) in the IT Act which empowered Board to provide for the circumstances in which, the condition subject to which and the manner in which CIT(A) may permit an appellant to produce an evidence which the appellant did not produce or was not allowed to produce before the AO. However, these powers of the Board, which have been vested in them for carrying out for the purposes of the Act, have to be exercised in such a judicious manner so as not to make any statutory provision redundant and nugatory. The rules made in exercise of these powers should also not be interpreted in such a manner as to narrow down, dilute or curtail the statutory powers, conferred on the CIT(A), by the provisions of s. 250(4) or (5) of the IT Act, 1961. Therefore, a harmonious interpretation of s. 250, even r/w r. 46A, cannot but mean that if facts of a case warrant that, before disposal of any appeal, CIT(A) is required to make further inquiries, either on his own or through the AO, he is not denuded of the powers to do so because of the provisions of r.46A.
6. We are conscious to the esteemed views of Hon'ble jurisdictional High Court that there has to be a reasonable explanation for non filing of such additional evidence before the AO. Hon'ble Calcutta High Court, in the case of Raj Kumar Srimal vs. CIT (1976) 102 ITR 525 (Cal), had an occasion to examine this aspect of the matter wherein Justice Sabyasachi Mukerjee (as he then was) observed :
"It is true, as contended by the counsel of the assessee, that AAC has very vide powers and the interest of the substantial justice he can make further enquiry and he can admit a new ground of appeal. He can also give deductions not claimed by the assessee, as was held by this Court in the case of Union Coal Co. Ltd. vs. CIT (1968) 70 ITR 45 (Cal). In this case, counsel for the Revenue also did not dispute that in certain circumstances the AAC had jurisdiction to admit new grounds if it was necessary to admit new evidence. The point in this case is not whether the AAC is entitled to admit the new ground or evidence either suo motu or at the invitation of parties. In this case, this is apparent that the AAC was not acting suo motu in additional evidence. If AAC was acting on being invited by the assessee, there must be some ground for admitting new evidence in the sense that there must be some explanation to show that the failure to adduce evidence earlier sought to be adduced before the AAC was not wilful and not unreasonable.......If ITA No.1442/Ahd/2012 Assessment Year: 2008-09 Page 7 of 10 without any explanation at all, the AAC admits additional evidence at the invitation of the parties, he would be exercising, in our opinion, a discretion not properly. He has undoubtedly a discretion vested in him to admit additional evidence in appropriate cases but admission of evidence at the instance of an appellant without any ground or explanation would not be exercising discretion properly and in such cases the appellate authority is competent, in our opinion, to interfere in the discretion by the AAC."
It is, therefore, necessary that appellate authority has to be satisfied on bona fides of the reasons of filing evidence-an aspect which has also been referred to in Electra's case, supra. In the case before us, the assessee's claim before the CIT(A) has been that "adequate opportunity has not been given for hearing" and that "order under s. 144 is not justified". It was in the background of these facts that the assessee submitted some fresh evidence in the shape of s. 80G exemption certificate of Anandlok Hospital and papers supporting the corpus donations. All other papers like audit report, list of charities and donations and financial statements were already filed before the AO, along with the income-tax return. It is also not Revenue's case that filing of additional evidence before the CIT(A) smacks of any mala fides or deliberate intent to act contrary to the scheme of the IT Act. We, therefore, support admittance of additional evidence by the CIT(A).
7. We have already expressed our view, in para. 4 above, that on the given facts, filing of additional evidence before the CIT(A) was covered by r. 46A(1)(c) of the IT Rules, 1962. In the light of the subsequent deliberations, we also find that CIT(A)'s admission of additional evidence was clearly within the scheme of powers vested in him under s. 250(4) of the IT Act because, as held by Bombay High Court in the case of Prabhavati S. Shah (supra), if prima facie an information is necessary to examine the claim of the assessee, the CIT(A) should consider the necessary evidence in exercise of his powers under s. 250(4). It is settled in law that when a statutory authority has the powers to do something, then it has a corresponding duty to exercise such powers whenever circumstances warranting exercise of such powers exist. The case before us, in our considered view, was a fit case where the CIT(A) should have exercised his powers to make further inquiries."
6. Once we take note of the fact, as was taken note by Hon'ble Bombay High Court in Prabhvati S. Shah's case (supra), that the CIT(A) has the powers under section 250(4) to make such further enquiry as he deems fit, it is only corollary thereto that in a deserving case, where facts and circumstances of the case warrant or justify such an inquiry, the CIT(A) has the obligation to do so. As noted by a co-ordinate bench, in the ITA No.1442/Ahd/2012 Assessment Year: 2008-09 Page 8 of 10 case of Sabnis Ashok Anant vs. ACIT [(2008) 10 DTR 203 (Pune)], "all the powers of someone holding a public office are powers held in trust for the good of public at large. There is, therefore, no question of discretion to use or not to use these powers. It is so for the reason that when a public authority has the powers to do something, he has a corresponding duty to exercise these powers when circumstances so warrant or justify--a legal position which has the approval of Hon'ble Supreme Court." In the present case, in our considered view, the CIT(A) ought to have examined the claim of the assessee on merit in the light of such evidence as he was able to produce. In any case, the Assessing Officer was duly heard in respect of these evidences.
7. As for the reliance placed on Rajat Bansl's case (supra), we find it was a case in which the Tribunal was of the view, as noted by Their Lordships, that "the assessee could not establish that additional evidences produced by the assessee before the CIT(A) is very much essential for just and proper decision in the case of the assessee". In the present case, quite to the contrary of the above findings, we are of the considered view that examination of these additional evidences, particularly in view of the fact that Assessing Officer had simply brushed aside the claim rather than examining it on merits, is essential for a fair and just adjudication on assessee's appeal. Revenue, thus, deserves no support from judicial precedent in the case of Rajat Bansl (supra).
8. In view of the above discussions, as also bearing in mind entirety of the case, we are of the considered view that the matter should be restored to the file of the Assessing Officer for fresh adjudication on merits by way of a speaking order, in accordance with ITA No.1442/Ahd/2012 Assessment Year: 2008-09 Page 9 of 10 the law and after giving a fair and reasonable opportunity to the assessee. While doing so, the Assessing Officer shall also consider, on merits, such new/additional evidences as assessee may seek to rely upon. With these directions, the matter is restored to the file of the Assessing Officer.
9. As the matter has been remitted to the file of the Assessing Officer for fresh adjudication, we see no need to deal with the matter on merits. We also make it clear that nothing stated herein shall be construed as our observation on merits of the matter. The Assessing Officer will examine the matter on merits in accordance with the law.
10. In the result, appeal is allowed for statistical purposes.
(Order pronounced in the open Court on 14th August, 2015) Sd/- Sd/-
Kul Bharat Pramod Kumar
(Judicial Member) (Accountant Member)
Ahmedabad, the 14 th day of August, 2015
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